Budget 2020 – What it means for you
The long awaited 2020 budget was always going to contain a vast number of new pledges and announcements as it sought to deliver on manifesto pledges, provide a post Brexit roadmap, deal with Coronavirus and begin the process of ‘levelling up’.
But with just a few weeks to prepare, Chancellor Rishi Sunak delivered a budget full of promises amounting to more than £170 billion in total, with further detailed spending to be announced in the infrastructure review, due in the summer. Punctuated by a 0.5% reduction in interest rates, announced just hours before, global markets in turmoil and revised forecasts from the OBR, at times it may have felt at-odds with the economic position.
As the commentators will tell you ‘ the devil is in the detail’ and like all those before, what you hear on the day is just a fraction of what is actually contained in the Budget itself – some 128 pages in total. But the reality is the wider budget has to deal with all aspects of running the country’s finances and so it can be difficult to pick out those items that are most relevant to your own personal circumstances.
Stuart Adams, Senior Client Manager at Haggards Crowther, takes you through the key announcements and those most likely to affect SME’s, entrepreneurs and personal investments:
- Income tax thresholds – The personal allowance for 2020/21 is frozen at £12,500, the same as in 2019/20. The higher rate tax threshold is also frozen at £50,000.
- National Insurance threshold – The thresholds at which employees and the self-employed start paying National Insurance contributions (NICs) will increase to £9,500 from 6 April 2020.
- Pension Annual Allowance – From 6 April 2020 the ‘threshold income’ limit will increase to £200,000 and the ‘adjusted income’ limit will increase to £240,000, meaning the majority of individuals will now fall outside the tapering rules. The minimum tapered annual allowance an individual can have will come down to £4,000.
- Entrepreneur’s Relief – From 11 March 2020 the lifetime limit on eligible gains (which offers a reduced 10% rate of Capital Gains Tax on qualifying disposals) has been reduced from £10 million to £1 million.
- ISAs – The annual ISA investment limit increased to £20,000 from 6 April 2017 and remains at that level for 2020/21, but there will be a significant increase in the Junior ISA limit from £4,368 to £9,000 for 2020/21.
- Flat Rate Scheme – From 6 April 2020 the maximum flat rate income tax deduction available to employees will increase from £4 per week to £6 per week where they work at home under homeworking arrangements.
- IR35 – The off-working payroll rules will kick in from 6 April 2020, which require large and medium-sized businesses to decide whether the rules apply to payments to workers who supplying their services through personal service companies.
- Employment Allowance –The Employment Allowance will increase from £3,000 to £4,000 from 6 April 2020, but will not be available to employers with total employer’s NIC liabilities in excess of £100,000p.a.
- Research & Development – The R&D expenditure credit will increase from 12% to 13% for companies that carry out qualifying research and development. This measure will take effect from 1 April 2021 not 2020.
- Business Rates – Retail, leisure and hospitality businesses with a rateable value of less than £51,000 will not pay any business rates in the 2020/21 tax year. Other very small businesses with a rateable value of less than £15,000 (and therefore already qualifying for a business rates exemption) will be able to claim cash grants of up to £3,000.
- Stamp Duty Land Tax – From 1 April 2021 non-UK residents purchasing UK residential property will face a 2% stamp duty surcharge. Purchasers who become UK resident after their purchase may become eligible for a refund of the surcharge.
- VAT – Books, magazines, academic journals and newspapers will no longer be subject to the 20% rate of VAT from 1 December 2020.
- Sick Pay – Businesses with fewer than 250 employees will receive statutory sick pay refunds from the government for up to 14 days per employee as a result of the coronavirus. SSP will also be paid from the first day of sickness absence, rather than the fourth day, for employees who have COVID-19 or have to self?isolate.
- ESA – ‘New style’ Employment and Support Allowance (ESA) will be payable for self-employed individuals directly affected by COVID-19 or self-isolating from the first day of sickness, rather than the eighth day.
This, in itself, is still just a snapshot of the full Budget and so if you have specific questions about any of the announcements in the Budget, require support and guidance in managing your business through uncertain times or would like to discuss your personal circumstances, please contact us.